Legislative Pensions: Avoid Them to Fix Them

The distance between the rulers and ruled continues to widen in Pennsylvania. For retiring and defeated members of the Pennsylvania House and Senate, the daily perks and privileges of office will disappear, but their departure will trigger the ultimate platinum parachute retirement plan.

The sting of voter rebuke at the ballot box will be eased by taxpayer-funded lifetime medical benefits for most, while others will collect hundreds of thousands of dollars from a taxpayer-fueled pension fund. The recently deposed President Pro Tempore of the Pennsylvania Senate will collect more than $105,000 per year in perpetuity for his years of “public service.” In the private sector, one would need approximately $2 million in cash to generate this kind of retirement income.

Although unjustifiable, the taxpayers’ bill for free cars, per diems, fine dining, personal libraries, and other extravagancies pale in comparison to the gold-plated pension and healthcare benefits packages. Yet they are all indicative of the efforts by career politicians to convert our citizen legislature to what House Speaker John Perzel recently referred to as a corporate-styled “board of directors.”

The details of Pennsylvania’s public-sector pension problem are detailed in the Commonwealth Foundation’s report, Beneath the Surface: Pennsylvania’s Looming Pension and Healthcare Benefits Crisis. In this sobering analysis, pension expert Richard C. Dreyfuss revealed the multi-billion dollar iceberg that will sink the taxpayers if elected officials fail to reform the design of the state’s government-employee pension systems—the State Employees Retirement System and the Public School Employee Retirement System.

With 8.5% returns on investments by the state pension funds, taxpayers’ contributions will skyrocket by $3.4 billion by 2012. Indeed, in less than six years, the average family of four in Pennsylvania will be compelled to increase their support for just these two public pension systems by $1,155.

The pension issue is not just a public concern for me, it is also personal. Nineteen years ago, as a member of the Pennsylvania House of Representatives, I signed a “declination form” refusing a lifetime of lucrative pension payouts. As a private-sector entrepreneur entering the House, I understood the need for government to operate within the constraints of real world realities, and for elected officials to uphold the ideals of “public service.”

In 1983, I realized that taxpayers had become victims of self-serving rather than public-serving politicians. The pension system was indicative of this fact, as it was designed for career politicians who would leave behind generations of debt and higher taxes. Unfortunately, the problem has only gotten worse.

To be sure, our lawmakers’ share of taxpayers’ money is miniscule when compared to the annual state government spending of more than $50 billion. But ever-increasing spending of working Pennsylvanians’ taxes greases the skids for the compensation, benefits, and perks that lawmakers have afforded themselves.

More than a public statement, declining the pension was my silent sermon that I hoped would inspire a wave of public servants to do the same—to put the public interest ahead of their own self interest. With up to sixty fresh, reform-driven lawmakers taking the oath of office next January, the chance for real leadership on this issue has never been greater.

This is a once-in-a-lifetime political “sweet spot” to change a broken system. Just consider what has happened in a matter of months. Citizen action has removed a Supreme Court judge, forced 47 members of the General Assembly into retirement, repealed an unconstitutional pay raise, and stimulated an historic number of challengers to the status quo.

The same reformers who pledged to charge the Capitol to prevent another pay raise can promise taxpayers that their motivation for service isn’t lifetime job security, but a genuine passion for serving the public. They can refuse to participate in the unsustainable public pension system, and pledge to bring it in line with private-sector retirement plans.

For these reformers, challenging the status quo by shrugging off these lucrative benefits will earn disdain from the shrinking cadre of “lifers” in the House and Senate. Until this past year, the political elite have prevented the public from learning about the abuses of the public trust and the public treasury. But by simply declining to participate in the pension system, these new lawmakers can begin to restore the ideals of public service and move Pennsylvania one step closer to the citizen legislature envisioned by the Founders.

The opportunity for reform exists, but will we seize it?

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John Kennedy is a former four-term member of the Pennsylvania House of Representatives and the Director of the Commonwealth Foundation’s Government Reform Initiative (www.CommonwealthFoundation.org).